Note ban has and may continue to result in a slowdown, warns SBI

Also says that note ban's impact could adversely affect its business

Latest news : The country's largest lender, the State Bank of India (SBI), has expressed apprehensions that demonetisation may continue to result in slowing down of the economy and adversely affect its business.

The government had discontinued Rs 500 and Rs 1,000 banknotes from November 9, 2016, and issued new Rs 500 and Rs 2,000 currency notes in exchange for the discontinued ones.

The long-term impact of this move on the Indian economy and the banking sector is uncertain, SBI told institutional investors prior to its Rs 15,000-crore share sale through private placement.

The effects of India's recent demonetisation decision are uncertain, which may adversely affect the bank's business, results of operations and financial condition, the bank said in the Preliminary Placement Document to investors while flagging the 'risk factors'.

"The demonetisation has and may continue to result in a slowing down of the Indian economy, which may adversely affect the Bank's business," it said.

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The document, SBI had said, contains forward-looking statements that involve risks and uncertainties. Further, the financial performance may differ from "such forward-looking" statements as a result of certain factors.

Post-demonetisation, there has been a surge in the current and saving accounts (CASA) deposits of banks.

According to a Reserve Bank of India report, the sharp increase in the share of CASA deposits in aggregate deposits by 4.10 per cent to 39.30 per cent (as of February 17, 2017) resulted in a reduction in the cost of aggregate deposits, and banks have correspondingly lowered their term deposit rates.(read more)